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EU energy chief Piebalgs rejects raising oil-stocks floor - extended

The European Union's energy chief will stop short of seeking an increase in minimum EU oil stocks when drafting measures to protect against supply disruptions such as this month's cutoff in flows from Russia.

Energy Commissioner Andris Piebalgs said the EU's existing requirement for member states to hold at least 90 days of oil stocks was adequate. He said expanding links with energy-rich regions such as the Caspian was more pressing. „If you have 90 days of oil stocks, you are reasonably comfortable,” Piebalgs said in an interview today at the World Economic Forum in Davos, Switzerland. „For Europe, it's much more important to invest in new pipelines.” His comments highlight the obstacles that the commission, the 27-nation EU's regulatory arm, faces in trying to win new energy powers from member states. The commission failed four years ago to gain backing from national governments for a boost in minimum stocks to 120 days of consumption and for more centralized controls. A cutoff earlier this month in oil deliveries from Russia to EU nations including Germany because of a Russian price dispute with transit country Belarus bolstered calls for a stronger European stocks system. That incident came a year after a disruption in Russian natural-gas supplies to the EU because of a price row with Ukraine, another transit nation.

The Brussels-based commission is examining ways to strengthen the EU oil-stocks system and is considering the possibility of proposing the creation of an EU system of gas reserves. In a policy paper earlier this month, the commission said „reporting requirements on member states should be reinforced” as part of changes to the oil-stocks system and „strategic gas stocks would help the security of gas supply.” The EU's primary challenge in ensuring adequate energy supply is to diversify sources, according to Piebalgs, who said he „was very much shocked and surprised” by the three-day cutoff of Russian oil that began on January 8. Russia shut its Druzhba oil pipeline across Belarus after accusing its western neighbor of illegal siphoning. The shutoff cut supplies to refineries in Poland, Germany, Slovakia, the Czech Republic and Hungary and renewed concern about Russia's reliability as an energy supplier. „Diversification is absolutely a must if you would like to have security of supply for Europe,” Piebalgs said. The Russia-Belarus dispute showed „how vulnerable we are” to „a particular line of supply being cut off.” He urged the extension to Plock in Poland of an oil pipeline between the Ukrainian cities of Odessa and Brody, saying this would help expand supply from the Caspian. „Odessa-Brody-Plock should be invested” in because „it is an additional route how you can bring Caspian oil to the European market,” Piebalgs said. (Bloomberg)